Filmmakers turning to online crowdfunding to fund movies

As traditional sources of funding in the movie industry have dried up for independent and other filmmakers, help has been pouring in from the online crowd.

The arrival four years ago of creative work crowdfunding web portals such as Indiegogo and Kickstarter has been a godsend to artists of all types - but especially filmmakers, who make up the largest group of campaigners on both sites.

The sites allow filmmakers to raise funding for their ideas from the public, sometimes in donations of just $5 or $10.

"Investors" don't really get a return on their funds, but they do get perks like free screenings, take-home props and even roles in the films - plus the pride of knowing they contributed to the finished work.

"People who have a film can engage their audience in what they feel passionate about in a way that was never possible before by including the audience in the creative process," said Adam Chapnick, whose job title is "evangelist" at Indiegogo's West L.A. office.

"So, you might give $5 and get thanked on Facebook or whatever, or $10 and get the film in a download when it's done.

"But then, you may give $500 and be in the film. Some of the horror films have done this in a great way; you give $500 and you can be a zombie. You give $750 and you can kill a zombie. People have also monetized associate producer credits and even crew jobs."

Kickstarter co-founder and "head of community" Yancey Strickler said almost $100 million has been pledged to films in the last 3<MD+,%30,%55,%70>1/<MD-,%0,%55,%70>2 years through his site.

"That money has come from hundreds of thousands of people from around the world," Strickler said.

As the law is now, it's not legal for companies to solicit equity investment online, nor can the average person invest that way. That's expected to change in the next year or so, when the Securities and Exchange Commission and Financial Industry Regulatory Authority work out rules for the recently enacted JOBS (Jumpstart Our Business Startups) Act.

In the meantime, filmmakers have to trade non-cash rewards for crowdfund contributions. The average Kickstarter pledge is $25, although individuals can donate up to $10,000 per project through the site.

This system seems to sit fine with most contributors, or backers as Kickstarter calls them, who in true Wild West Web fashion are more interested in seeing the finished product than in making money off of it.

And they can get some cool stuff.

Nancy Ramos, a registered nurse from Chatsworth, was excited to win a raffle through Indiegogo for a guitar prop used in "Angry Video Game Nerd: The Movie" a recently completed feature film based on James Rolfe's popular webisode series.

"I've been watching him for so long for free, why not give back and help him achieve his dream?" she said.

"I would do this again, definitely, because honestly, with how mainstream movie titles are now, it's pretty much remakes and not very creative at all. I would love to give people who are able to come up with things that are different a chance."

One of the "AVGN" movie's producers, Sean Keegan, noted that the feature was fully funded by its Indiegogo campaign and a PayPal fundraiser on the show's website.

While less-expensive short film and video projects can get made entirely via a successful crowdfunding campaign, features tend to use crowdfunding for seed or finishing money and as proof to show more traditional investors that, indeed, there is an eager, paying audience out there for the product.

The film crowdfunding peak is currently in the six-figures range, which "AVGN" reached quite easily and unexpectedly. The producers had hoped to raise $75,000 - and ended up getting more than $325,000 from 6,800 contributors, Keegan said.

Kickstarter operates exclusively on an all-or-nothing basis. Campaigners set a dollar goal to be reached in a period of one to 60 days. Backers pledge donations via credit card; if the money figure is achieved or exceeded in time, the cards are charged and processed by Amazon Payments, which distributes 95 percent of the money to the filmmaker and a fee of 5 percent to Kickstarter. If the campaign falls short of its goal, even by as little as $1, in the allotted time, no money changes hands.

Indiegogo offers an all-or-nothing plan as well, but you can also go the flexible funding route, where artists keep all the money raised by the end of their campaigns regardless of whether or not they hit their number goal. Those who fall short simply pay a higher percentage fee to Indiegogo.

As it has always been throughout the Hollywood food chain, the key to a successful crowdfunding campaign is promotion.

Pamela Tom has been working 14 years on her documentary "Tyrus Wong: Brushstrokes in Hollywood." Wong is a 102-year-old Sunland artist who came from China to California as a child and ended up working for Walt Disney and many other producers.

Tom went the traditional route to fund the doc for years, but is now in the middle of a $35,000 Kickstarter campaign to finance post-production.

"It's just a lot of work," Tom, a fifth generation L.A. native who lives in Glendale, said of the old way. "To write the grants, it's a tremendous amount of time, and there's no guarantee that you'll get them. And that kind of funding was starting to dry up. So the timing was just right when companies like Kickstarter came along."

Attracting crowdfunding takes work, too, though. Tom approached groups in the various communities - Chinese-American, animation, kite enthusiast - interested in Wong to be outreach partners for her campaign. In exchange for such things as sending email blasts out to their members, their logos are up on the film's Kickstarter page and screenings of the finished film will be arranged for their groups.

Backers can receive rewards ranging from works of Wong art to dinner at a restaurant owned by Tom's brother.

Asked if she thought Kickstarter would save her $250,000 movie, Tom noted that her project was 87 percent funded with 12 more days to go.

"We'll see!" she said with a hopeful laugh. "But I think that Kickstarter is most definitely going to play a major role in our ability to complete the film."

Even established industry figures are jumping on the crowdfunding bandwagon.

The result? More than twice their $200,000 goal, which enabled them to attract the rest of the money they needed to make the feature from those initially skeptical traditional financiers. The movie is in pre-production now.

"At the time, we were the highest-funded film of any kind on Kickstarter," Johnson said of last summer's campaign, for which he made an animated pitch video that was placed prominently on the project's donation page. "These investors needed to see that there were thousands of people who wanted to see this movie. Without Kickstarter, that wouldn't have been possible."

Great as it turned out, though, Kickstarter campaigning is an experience producer Tran does not wish to repeat.

"It's probably one of the hardest things I've ever had to do in my whole entire life," she noted. "It's 24 hours a day, seven days a week. We were so lucky that it was so popular. But people had questions. They email about when they can get their stuff. One or two people emailing about that is no problem, but hundreds is overwhelming."

There are potential hazards to crowdfunding, of course. Donors should understand that anything can go wrong in the filmmaking process, and while fraud is currently minimal at platforms like Indiegogo and Kickstarter, some funded projects will not be completed.

Then there's the potential that backers could overstep their authority, creative input-wise.

"It's great as an alternative to traditional funding," acknowledged longtime Hollywood producer and executive Larry Namer, a co-founder of E! Entertainment Television, "as long as you recognize the negatives that come along with it and kind of pre-plan how you're going to deal with them. You're going to get a lot of people that will be giving you comments about your cast and your script. Everybody whose money you take in becomes a filmmaker. Sometimes it becomes nightmarish."

The filmmakers interviewed for this article all said nothing like that has happened to them, although some have actually sought advice from their industry pro backers.

Whatever the risks, it looks like crowdfunding for movies will likely explode once the equity investment rules are set.

"This is transformational," said Heather Lindsey, COO of the crowdfunder.com portal. "In (a few) years, anybody who wants to make a movie is going to be able to put their company online. The film industry has always been really good at taking outside capital. Now, it's hearing the voice of the crowd. I think it will prove especially powerful for movies."